New Delhi, Sept. 27 -- A falling stock price can look like a buying opportunity, especially when an investor already owns the stock. Many investment advisors and market experts recommend buying additional shares of fundamentally strong companies when their prices fall, as it can lower the average purchase cost.

This strategy is known as stock averaging. For example, if you buy 10 shares at Rs.100 each and the price falls to Rs.80 after a market correction, you have three choices: cut your losses, wait for a recovery or buy more. If you choose the third option, the stock would need to rise less for you to break even.

Averaging is not limited to buying more when a stock falls. Investors may also add to their holdings when a stock is risin...